DoD's $103M water systems contract to American Water Enterprises, LLC, awarded in 2003, extends through 2054

Contract Overview

Contract Amount: $103,327,633 ($103.3M)

Contractor: American Water Enterprises, LLC

Awarding Agency: Department of Defense

Start Date: 2003-09-25

End Date: 2054-04-15

Contract Duration: 18,465 days

Daily Burn Rate: $5.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Other

Place of Performance

Location: FORT NOVOSEL, DALE County, ALABAMA, 36362

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $103.3 million to AMERICAN WATER ENTERPRISES, LLC for work described as: Key points: 1. Long-term contract duration suggests a need for sustained service delivery. 2. Fixed Price Redetermination contract type indicates potential for price adjustments based on actual costs. 3. Awarded by the Defense Logistics Agency, highlighting critical infrastructure support. 4. The contract's extensive timeline may present risks related to technological obsolescence and changing operational needs. 5. Focus on water supply and irrigation systems points to essential base operations support. 6. The contract's value, while substantial, needs to be assessed against the 51-year performance period.

Value Assessment

Rating: fair

The total contract value of $103.3 million over a 51-year period averages to approximately $2 million per year. This annual figure appears reasonable for large-scale water infrastructure maintenance and operation, especially considering the potential for significant capital investments. However, without specific details on the services rendered and the scope of work, a precise value-for-money assessment is challenging. Benchmarking against similar long-term, comprehensive water system management contracts for federal installations would provide a clearer picture of its competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This competitive process is generally expected to yield favorable pricing and terms for the government. The presence of two bids suggests a moderate level of competition for this long-term infrastructure service.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces, ensuring the government receives competitive pricing for essential services.

Public Impact

Military personnel and their families stationed at facilities managed under this contract benefit from reliable water supply and irrigation. Ensures the operational readiness of military bases by maintaining critical water infrastructure. The contract supports essential services in Alabama, where the contractor is located. Potential for job creation within the water utility and infrastructure management sectors in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The extremely long contract duration (51 years) raises concerns about potential cost overruns due to inflation, technological advancements, and unforeseen operational challenges over such an extended period.
Fixed Price Redetermination contracts can introduce uncertainty in final costs if not managed meticulously, as prices may be adjusted upwards.
Lack of specific performance metrics or interim review points in the provided data makes it difficult to assess ongoing performance and value.
The contract's age (awarded in 2003) might mean initial pricing was based on outdated market conditions or technology assumptions.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process that likely secured a reasonable initial price.
The Defense Logistics Agency's involvement indicates a focus on essential, long-term operational support for military readiness.
The contract's longevity implies a stable, long-term relationship and potentially deep expertise developed by the contractor in serving the specific needs of the DoD.
The fixed-price nature, even with redetermination, provides a degree of cost control compared to cost-plus contracts.

Sector Analysis

This contract falls within the Utilities and Infrastructure Management sector, specifically focusing on water supply and irrigation systems. The market for such services is characterized by specialized engineering expertise, regulatory compliance, and often long-term service agreements. Federal contracts in this area are crucial for maintaining essential services at government installations, often involving significant capital investment and ongoing operational costs. Comparable spending benchmarks would typically involve analyzing other large-scale water utility management contracts awarded to private entities by federal agencies or large municipal water authorities.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large, long-term infrastructure service contract, it is possible that the prime contractor, American Water Enterprises, LLC, may engage small businesses for specialized services or supplies. However, without explicit subcontracting plans or performance data, the direct impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which is responsible for contract administration and ensuring compliance with terms and conditions. The contract's long duration necessitates robust oversight mechanisms, including regular performance reviews, audits, and potentially independent cost analyses to manage the redetermination clauses effectively. Transparency would be enhanced through public reporting of contract performance and any significant modifications or disputes. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Base Operations Support Contracts
Military Housing Utilities
Federal Water Infrastructure Projects
Defense Logistics Agency Procurement
Long-Term Service Agreements

Risk Flags

Long contract duration increases risk of cost escalation and obsolescence.
Fixed Price Redetermination pricing requires careful monitoring to control costs.
Potential for outdated technology over the 51-year performance period.
Contract awarded in 2003 may not reflect current market rates or needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.3 million to AMERICAN WATER ENTERPRISES, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is AMERICAN WATER ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $103.3 million.

What is the period of performance?

Start: 2003-09-25. End: 2054-04-15.

What specific services are included under the 'Water Supply and Irrigation Systems' for this contract?

The 'Water Supply and Irrigation Systems' designation typically encompasses a broad range of services critical for military installations. This includes the operation and maintenance of potable water treatment and distribution systems, ensuring compliance with stringent health and safety standards. It also covers wastewater collection and treatment, stormwater management, and the maintenance of irrigation systems for groundskeeping and landscaping. For military bases, this can extend to fire suppression water systems and specialized water needs for training or operational facilities. The long duration of this contract suggests it likely includes infrastructure upgrades, repairs, and potentially new installations over its 51-year term, requiring ongoing capital investment and planning.

How does the 'Fixed Price Redetermination' pricing structure work in practice for this contract?

A Fixed Price Redetermination (FPR) contract establishes an initial target price, but allows for this price to be adjusted upwards or downwards after a specified period or upon completion of certain work, based on actual costs incurred. For this $103 million contract with American Water Enterprises, LLC, the initial price set in 2003 would have been an estimate. After a defined period (e.g., annually or at milestones), the government and contractor would review the actual costs of providing water supply and irrigation services. If actual costs were higher than anticipated, the price could be redetermined upwards, up to a ceiling. Conversely, if costs were lower, the price might be adjusted down. This structure aims to balance the government's need for cost certainty with the contractor's need to cover unpredictable costs in long-term, complex service provision.

What are the potential risks associated with a 51-year contract duration for water systems?

A 51-year contract duration presents significant risks, primarily related to long-term cost management and adaptability. Inflation over five decades can substantially increase operational and maintenance costs beyond initial projections, even with redetermination clauses. Technological advancements in water treatment, distribution, and monitoring could render current systems obsolete, requiring costly upgrades or replacements not fully anticipated in the original scope. Furthermore, environmental regulations and water resource availability can change dramatically over such a long period, necessitating adaptive management strategies and potentially incurring unforeseen compliance costs. The contractor's financial stability and operational capacity over multiple decades also pose a risk, as does the potential for shifts in military base requirements or strategic priorities that could alter the demand for water services.

How does the Defense Logistics Agency (DLA) typically manage long-term infrastructure contracts like this one?

The Defense Logistics Agency (DLA) manages long-term infrastructure contracts by establishing clear performance standards, conducting regular oversight, and ensuring robust contract administration. For contracts like this water systems agreement, DLA would likely assign dedicated contract officers and technical representatives to monitor service delivery, review performance reports, and manage financial aspects, including price redeterminations. They would ensure compliance with all contractual terms, including safety, environmental, and quality standards. Given the contract's longevity, DLA would also be responsible for managing any contract modifications, addressing potential disputes, and ensuring that the services remain aligned with evolving military needs and technological capabilities through periodic reviews and potential renegotiations within the contract's framework.

What is the significance of awarding a water supply contract through 'Full and Open Competition'?

Awarding a water supply contract through 'Full and Open Competition' signifies that the Department of Defense sought proposals from all responsible sources, maximizing the potential for competitive pricing and innovative solutions. This process involves publicizing the requirement, allowing any interested and qualified company to submit a bid. The presence of two bidders, as indicated in the data, suggests a moderate level of competition. This approach is generally preferred by the government as it leverages market forces to achieve the best value for taxpayers, ensuring that the selected contractor offers terms and pricing that are demonstrably advantageous compared to what might be obtained through sole-source or limited competition methods. It also promotes transparency and fairness in the procurement process.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Water Supply and Irrigation Systems

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060001R0067

Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 1 WATER ST, CAMDEN, NJ, 08102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $228,729,835

Exercised Options: $228,729,835

Current Obligation: $103,327,633

Actual Outlays: $8,205,265

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline